CHINA ALUMINUM: ADC12 spot offers under pressure as trades fail to pick up

China's domestic spot aluminum alloy offers were under pressure as trading activity has failed to pick up, and also due to weak London Metal Exchange aluminum ingot prices, market sources said Tuesday.

Leading Chinese producer Sigma Metals held its offer steady at Yuan 17,100/mt ex-works ($2,749/mt) Tuesday, unchanged week on week, while most non-Sigma offers were at Yuan 15,600-16,100/mt, similar to those heard last week.

Platts maintained its weekly China domestic ADC12 assessment at Yuan 15,600-16,000/mt ex-works Tuesday, unchanged from the previous week.

"Aluminum ingot prices rebounded from last week but remained weak," said an East China-based source. "ADC12 offers, which have been supported by steady scrap prices, appeared to be showing signs of easing, in view of thin spot trade and weak ingot prices," he added.

An East China-based diecaster said: "Although I have bought a small tonnage around Yuan 15,800/mt this week, the physical demand for ADC12 from diecasters is generally not so good."

Another East China-based diecaster said: "Like last week, I still haven't bought anything this week, as I don't have any orders for ADC12 diecast parts."

China's spot aluminum ingot price was heard around Yuan 14,530/mt Tuesday, up from Yuan 14,430/mt last Tuesday but down from Yuan 14,540/mt Monday.

On Tuesday, the March aluminum futures contract was at Yuan 14,600/mt on the Shanghai Futures Exchange, compared with Yuan 14,500/mt last Tuesday and Yuan 14,665/mt Monday.

The LME official cash price for aluminum stood at $1,895-1,895.50/mt Monday, down from $1,926.50-1,927/mt last Monday.

Meanwhile, spot ADC12 import trades into Japan was thin this past week due to the weaker yen, trading at Yen 96.55 early Tuesday compared to Yen 93 a week ago.

Platts FOB China ADC12 assessment for exports was steady at $2,170-2,190/mt Tuesday, unchanged from last week as the weaker yen led to thin trading activity.

Only one Japanese trader reported buying at $2,180-2,210/mt CIF Japan for April loading from China, with other details not disclosed. Other traders reported no business as the weaker yen made imports more costly. Spot offers from China and south Europe were at $2,180-2,210/mt CIF Japan for April-May loading.

"I did not get any inquiry from Japan as the yen is very weak," said an East China-based producer, who was keeping her offers around $2,190/mt CFR Japan.

The price difference between CIF and CFR is negligible.

Another East China-based producer, who was offering at $2,180-2,210/mt CIF Japan, said: "Japanese buyers are holding back as the weaker yen is making it expensive to buy at the moment."

He added that he couldn't drop his price as the imported scrap aluminum price was holding steady on the back of persisting tightness in supply.

Imported aluminum scrap was heard steady at $1,800-1,900/mt CIF China.

Japan's domestic prices were heard at Yen 210-220/kg delivered, which is equivalent to $2,080-2,190/mt CIF, excluding local delivery costs based on an exchange of Yen 96 for a dollar.

"If the yen strengthens, buyers may come back. These days the exchange rate is the most important purchase factor, rather than the spot offer price or the London Metal Exchange price trends," said one Japanese trader.

One Japanese diecaster said he was buying his monthly requirement from local suppliers, as his company's April-June consumption estimate was flat from January-March.

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